Topic: Major mistake all traders make - page 5. (Read 1104 times)
Important aspect for any trader is avoid trying to take advantage of each potential market movement. In case of the near peak levels of last year, it comes down to common sense, because it was pretty obvious that there was no room for any up movement left anymore. I have been a day trader as well, and the urge to constantly try to exploit the movements were what was holding me back. I turned out to make much more profit while take distance for a good moment, than being active all day in a forced manner. And yes, I do agree that if you did end up buy yourself in the market at what later turns out to be a horrible price, liquidate your positions as soon as possible. In some cases you just have to accept that the market is always one or two steps ahead of you, and that you have to take a hit. It should be considered collateral damage as long as you make more profitable than losing trades.
An active day trader myself (sort of), I often think about common mistakes people make in trading. And it seems that I have traced back most if not all such mistakes to their root cause. In a nutshell, it all comes down to being unable to back out if something goes wrong. For example, you buy a few bitcoins at a December high and expect the price to continue rising, which is kind of obvious. Instead, the price starts crashing down and you find yourself in a situation that you didn't envisage or consider beforehand. So your best option would be to bring things back where they were as fast as possible even if it means some loss.
It is not so much about placing dumb stop-loss orders or other trading techniques aimed at minimizing losses as about your mental disposition or general attitude to immediately get out of what can be loosely called a decision limbo when you basically don't know what to do. In other words, search for the exit where the entrance is and do that fast.
It is not so much about placing dumb stop-loss orders or other trading techniques aimed at minimizing losses as about your mental disposition or general attitude to immediately get out of what can be loosely called a decision limbo when you basically don't know what to do. In other words, search for the exit where the entrance is and do that fast.
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